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Honorable Mayor and <br />Members of the City Council <br />City of Lino Lakes <br />Inventory Capital Assets <br />The City has a significant investment in equipment, and we recommend that controls be strengthened in <br />this area. Most capital assets are not physically inventoried, counted or verified. We recommend that <br />periodic physical counts of property, especially removable equipment items, be taken and compared to <br />the detailed capital asset subsidiary ledger. Affixing identifying tags with numbers as assigned in the <br />subsidiary ledger will aid in making this comparison. The added controls will do the following: <br />• Assist in planning for capital expenditures. <br />• Assist determining accurate amounts and values of insurable assets. <br />• Assist detecting the loss or unauthorized use of assets. <br />During the audit it was also noted that although an accountant prepares a monthly reconciliation of <br />capital outlay, construction in process and capital assets, the reconciliation is not reviewed. To improve <br />segregation of duties we recommend review and approval of the monthly reconciliation by someone <br />other than the preparer who has knowledge of capital asset activity. <br />Conclusion <br />We welcome the opportunity to discuss the points mentioned in this letter or any other accounting and <br />procedural issues in order to coordinate our efforts with you, the mutual objective being the <br />development of more effective accounting procedures for the City. We understand that some of the <br />aforementioned points are in the process of implementation or may already have been implemented; <br />however, these points are noted so that effective follow-up can be accomplished. <br />We sincerely appreciate all the courtesies and cooperation extended to us by you and the staff of the <br />City, and thank you for the opportunity to be of service to you. We look forward to working with you in <br />the future. <br />This report is intended solely for the information and use of the City Council, finance committee, <br />management, the Office of the State Auditor, and federal awarding agencies and pass-through entities <br />and is not intended to be and should not be used by anyone other than these specified parties. <br />Minneapolis, Minnesota <br />May 26, 2009 <br />(5) <br />LarsonAllen LLP <br />, <br />